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Load vs No Load Mutual Funds

Today’s tip will cover “What is the difference between load and no-load mutual funds?”

A no-load fund is a mutual fund in which shares are sold without a sales charge. This occurs because the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission at the time of the fund’s purchase, at the time of its sale, or as a “level-load” for as long as the investor holds the fund.

So, the next question you might be asking yourself. “Why Would Anyone Buy a Load Mutual Fund?” At first glance, it seems that all investors would be better off buying no-load mutual funds. However, there are a variety of reasons why an investor considers a load mutual fund.

1) Many investors do not feel comfortable making investment decisions and will not invest without the help of a financial advisor.

2) Many investors do not have the time needed to do their own research.

3) Some investment professionals argue that financial advisors have the ability to keep their clients from making rash decisions when the market is turbulent.

The argument is that no-load mutual fund investors are far more likely to sell their investments at exactly the wrong time.

Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER TM in Carlsbad California. If you would like to set up a free 30 minute financial assessment she can be reached at 760-692-5700, for private message or click on the following link to contact us directly

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